Forget the Euro, Here's Where the Action Is: Pro
By: 
It wasn't so long ago that doomsday predictions about the euro were everywhere. It was unclear whether Greece could manage to remain in the euro zone, or what would happen if it left. Some pros even asked whether the euro could survive at all.
Jens Nordvig, however, is so over that.
Nordvig, head of fixed income research, Americas, and global head of currency strategy at Nomura Securities, was a major euro bear for months. Now, he thinks the euro "is likely to trade in fairly narrow ranges into year-end," he wrote in a note to clients.
European Central Bank bond buying plans and the U.S. own accomodative monetary policy have helped reduce the risk of euro disaster.
Now, a period of capital outflows from Europe seems to be winding down, Nordvig says. Moreover, recent data suggests bond buying is at its strongest level since the massive liquidity infusion euro zone banks got through the ECB's long term refinancing operation (LTRO) earlier this year.
New balance of payments data from the ECB shows that about 42 billion euros "flowed into euro zone bonds from abroad during August: the strongest month since the LTRO bonanza in February," he says. He added that figures from the Bank of Japan also show Japanese investors dipping their toes back into euro zone bond markets. "All told, the flow picture is normalizing."
So Nordvig is looking east for action. He is bearish on the yen, and the newest data on Japan's trade balance only reinforces his view.
Not only that, "positioning data suggest that the market has yet to re-establish yen shorts," he says. Any downtick in the currency could lead investors to bail out of their long positions and exacerbate the move, Nordvig added.
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